Coronavirus: Businesses begin to pay towards furlough scheme

Workers tend to clients in a beauty salon

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Businesses that have furloughed staff during the coronavirus pandemic must now start contributing to the government’s job retention scheme.

From Saturday, firms must pay national insurance and pension contributions until the scheme ends in October.

It comes as the Resolution Foundation think tank suggests more than half of the people furloughed during the pandemic are now back at work.

The government said millions of jobs have been saved because of the scheme.

But Labour’s shadow business secretary, Ed Miliband, said businesses “now face the stark choice of letting go of their staff or facing a hefty financial burden to keep them on”.

He called on the government to abandon the blanket withdrawal of the furlough scheme for all businesses in October.

The Resolution Foundation has warned that winding the scheme down “carries the real risk of increased redundancies”, echoing concerns raised earlier this week that it could push unemployment to 10% this year.

It comes as some businesses face putting workers back on furlough after plans to ease lockdown in England were halted by Prime Minister Boris Johnson on Friday.

Under the furlough scheme, workers get 80% of their salaries paid for by the government – up to £2,500 a month.

It was introduced by the Treasury at the beginning of the pandemic to prevent mass redundancies and was originally intended to last until the end of July.

Latest furlough figures from the government showed 9.5 million jobs – a third of the private sector work force – have been furloughed, at a cost of £31.7bn to the Treasury.

The Resolution Foundation said fewer than 4.5 million workers were currently on the scheme.

But many businesses in England expecting to reopen this weekend will now have to wait at least another fortnight because of a rise in coronavirus cases, the prime minister said on Friday.

Casinos, bowling alleys, skating rinks and close-contact beauty treatments are among those to be affected by the latest changes.

The number of furloughed workers at any one time peaked at nearly eight million in late April, the Resolution Foundation said, based on analysis of three separate Office for National Statistics surveys.

Dan Tomlinson, senior economist at the think tank, said: “The job retention scheme has supported around a third of the private sector workforce at some point since lockdown began, protecting family incomes and preventing catastrophic levels of unemployment.”

But he said millions of employees are currently without work – particularly in sectors such as hospitality and leisure – and called for the government to phase out support for these “hardest hit” sectors more slowly due to a heightened risk of unemployment.

A Treasury spokesman said: “We said at the start of the crisis that we couldn’t save every job – but it’s clear that the furlough scheme has saved millions of them – and now many people who’ve been furloughed are able to return to work.

“That’s good for the economy, but more importantly it’s good for individuals, their families and communities.”